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ROLE AND CONTRIBUTION OF PURCHASING AND SUPPLY MANAGEMENT OF PROFITABILITY OF AN ORGANIZATION

CHAPTER ONE

INTRODUCTION 

1.1 BACKGROUND TO STUDY

For the survival of any organization, be it public or private the difficult is the most vital factor is therefore means the coordination and maximum contribution from each basic function of the organization such as creation, finance, personnel, conversion and distribution, especially the purchasing, function towards the success of the entire organization. However, efficient performance or the purchasing function is important to the smooth operation of organization and as a result the role of purchasing is latent and conspicuous. 

It is a basic responsibility of purchasing function to obtain material of services to ensure that the flow of production is not interrupted. As has been described “purchasing is one of basic requirement for a company to cut cost and thereby increases profits. When are contemplates that for every sales there must be a buyer and that for every sales there must be a buyer and that other side of coin is buying, one in the public sector stripped. The reason for this stems sometimes aroma the wrong interpretation given to the art of purchasing plays an unquantifiable role in field of management activity and contributes highly to profitability. The words Geoff Lancasters, in the journal of 1984 edition of purchasing should acknowledge its latent role as being much broader in its traditionally recognized role of merely being reacquisition facility.

NIGERIAN BOTTLING COMPANY PLC

Nigerian bottling company Plc was originated as a soda function beverage in 1886 selling for five least. Early growth was impressive, but is was only when a strong bottling system that coca-cola because the world famous brand as it is today. 1884- a modest start for a bold idea, since the emergence of this organization, it has snifter to market and consumers different types of soda fountain beverages. The number of soda fountain beverages sent to our market by this bottling company plc, in doubt has made tremendous impact on the reduction of the micro economic variables problems in this country through generating to our economy, creation of job opportunities etc the management of Nigeria bottling company plc is a public liability company.

1.2 STATEMENT OF PROBLEM 

Business conditions during the recent past placed much strain and pressure and purchasing management function and roles. Critical materials shortage, worldwide inflation and arbitrary action of government seriously interfered with the orderly operation of business. Materialism is the source of out present day Nigeria society and people who are responsible for purchasing function in Nigeria bottling company plc Aba, and other good (public) companies however purchasing management and its allied subject are the newest course read full-time in some higher institution of higher learning and more than seventy percent of firms in Nigeria are yet to embrace this in its most meaningful and realistic dimension.

Much corporate management has been made painfully aware of the shortcomings of the operation of their firms material management function, indeed, it is among the best of the specialized business functions to be centralized and given the responsibility and authority for making profit progress in this area of business management is thus just beginning. The development of purchasing role and function in the (public sector) Nigeria Bottling Company Plc Aba has been badly affected by the “buying syndrome”.

1.3 OBJECTIVE OF THE STUDY 

This study is carried out with the following objective.

1. To examine the various role of contribution of purchasing and supply management profitable of an organization available and evaluate their application.

2. To make critical study of problem in the services offered by the firm and suggest solutions to these problems. 

3. To formulate the role of purchasing strategies that would be.

1.4 RESEARCH QUESTION 1

1. Does purchasing department have adequate number of customers?
From the research sampling carried out among customers number (250) one hundred and eighty customers agreed, from (180) (5) disagreed and 20 undecided. Therefore the percentages of the responses are calculated below.
Number of customers Decision arrives Percentage (%)
180 Agreed 72%
50 Disagreed 20%
20 Undecided 8%
Total 250 100%

Calculation of percentage per zone.
180/(250 ) x 100/1 = 72%

50/(250 ) x 100/1 = 20%

20/(250 ) x 100/1 = 8%
Statement: from the above sample 725 of the customers agreed that purchasing department have adequate number of customers, 20% of the customer disagreed with 8% then remain undecided.

RESEARCH QUESTION 2

Do you find out reason why customer waste much time in the company?
From research sampling carried out among customers agreed that much time is wasted that not more than enough time is spent in the company, while 5 of them refused to comment. Therefore the percentage of respondents are calculated below. 
Number of customers Decision arrives Percentage (%)
220 Much time wasted 88%
25 Normal time 10%
5 Refused comment 2%
Total 250 100%
Calculation:

The percentage of customers that wasted much time in the company is
220/(250 ) x 100/1 = 88%
88% of the customers wasted their time when transacting business with the company due to nonchalant and indifferent attitude of the staff, 10% of the customers spend not more than enough time in the company, therefore are satisfied with the company service. The percentage is therefore:
25/(250 ) x 100/1 = 10%
While 5 customer refused to comment on the research question the percentage of the customers are:
5/(250 ) x 100/1 = 22%
In conclusion 88% of the customers are not satisfied with the service received from the bank, 10% are satisfied with the level of service rendered to them while 20% refused. Therefore the bank should strive harder to improve its service so as to retain its customers as well as gain more.

RESEARCH QUESTION 3

How was introduction of modern technology such as computer welcome into the system by the staff. 
250 staff were interviewed on the before mentioned question, 200 of them welcome it with optimism, 30 among them welcome it with mixed feelings for fear of loosing their jobs to computer while 20 among them rejected the introduction and refused.
Number of customers Decision arrives Percentage (%)
200 Welcome modern technology 80%
30 Received with mixed feelings 12%
20 outright rejected 80%
Total 250 100%
To find the percentage of staff who welcome the introduction of modern technology is shown below:
200/(250 ) x 100/1 = 80%
80% of the staff are satisfied with the introduction of modern technology because it saves time and improves customers service. 30 staff received or welcomes it with mixed feelings because of loosing their jobs to computer. Therefore the percentage representation of the number is as follows:
30/(250 ) x 100/1 = 12%
While the percentage of 20 staff spoke against the introduction of modern technology as follows
20/(250 ) x 100/1 = 81%

1.5 SIGNIFICANCE OF THE STUDY 

This research project in all its tendencies aim at correcting many professional lapses and undue encroachment of unqualified personnel in both private and public sectors. It is intended that the research will keep both the government and industrialists, in setting up their industrial to realize that without efficient purchasing officer the envisaged profit will remain that no previous study was been carried out in purchasing activities in the public sector, but this will in particular reshape the financial profitability of Nigeria.

1.6 SCOPE OF THE STUDY 

The study of the role and contribution of purchasing of an organization cover a very complex areas. But in the case of our study it is narrowed to soda fountain beverages production.

1.7 LIMITATION OF THE STUDY 

In carrying out this research, the research was cooperated with a number of limitations. Due to finance and time constraints the research was unable to examine all the variable in purchasing in all the leading, public and private companies, limitation of the study to a few public enterprise.

1.8 DEFINITION OF TERMS 

1. Purchasing: Is the process involving planning and strategy designed to obtain value for money spent.

2. Vendor: This focuses on the knowledge of selling and buying the person that supplies goods to the buyer is the vendor.

3. Negotiation: Is a conference between one party or person with a view to arriving at a consensus.

4. Material handing: This is the process by which materials are being moved, handed and stored with in and around an establishment with the use of hand or mechanical equipment. 

5. Organization: An organization is a group of people who from a business with the aim of making profit or achieving an objective.

6. Storehouse: A storehouse is a building designed to keep materials until when there are needed by the users.

7. Storekeeping: Is a systematic procedure of recording transaction in the store, so that at any given time the stock record will show the actual position of each material held with the store organization.

8. Storekeeper: Is a person who keeps or operate the systematic procedure of recording transaction in the storehouse so that materials held in store will be safeguarded.

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